supplies to SEZ unit

[Mr Rao]

Dear experts

One manufacturing unit is supplying goods and services to SEZ. After GST coming into existence, the exporters need to pay GST on their supplies to GST and to overcome the same they intend to file LUT with the department. But as per the Notification No.16/2017-Central Tax Dt.7.7.2017, CBEC specified certain condition and safeguards for the registered persons to supply goods or services for export without payment of integrated tax for furnishing LUT in place of Bond. As per one of the conditions, the exporter who received due foreign inward remittances amounting to a minimum of 10% of the export turnover, which should not be less than one crore rupees in the preceeding financial year is eligible for submission of LUT. Whether an exporter who supplies to SEZ and gets export turnover of 1 crore in indian currency eligible for LUT or not ? Pl.clarify.

[MUKUND THAKKAR]

please read read condition carefully

it is mention that "exporter who received due foreign inward remittances amounting to a minimum of 10% of the export turnover, which should not be less than one crore rupees in the preceeding financial year is eligible for submission of LUT."

what ever exporter received in case of supplies in to SEZ, it's callRealization not remittances. so in case of supplies to SEZ and gets export turnover of 1 crore. in Indian Currency not eligible for LUT.

[Hariharan Sundaram]

Dear Gorantla, Please refer to 5/5/2017 GST dated 11.08.2017 specifically to Para 2(f) your query has been clarified in favour of you. So you can execute LUT and clear goods to SEZ unit subject to illustrations given at Para 2(a) of the above circular.

AI Summary

LUT eligibility for SEZ supplies clarified: exporters may execute LUT subject to specified circular conditions. Eligibility to furnish a Letter of Undertaking for supplies to SEZ depends on the Notification condition requiring foreign inward remittances of a minimum proportion and threshold in the preceding year; one view treats SEZ receipts as realization (not remittances) and disqualifies such exporters, while a departmental circular (paras 2(f) and 2(a)) clarifies that exporters supplying to SEZs may execute LUT and clear goods without integrated tax subject to the circular's specified conditions and illustrations.